2 Senators Draft Compromise On Loan Guarantees To Israel

WASHINGTON-- Two senators overseeing the foreign aid bill have reached a compromise on granting $10 billion in loan guarantees to Israel that would grant $1 billion in guarantees this year.

The rest would be subject to restrictions on new settlements set by President Bush.

Congressional and administration officials said on Friday that Bush and Secretary of State James A. Baker III were considering the compromise worked out by Sen. Patrick J. Leahy, D-Vt., and Sen. Robert W. Kasten Jr., R-Wisc., of the Senate`s foreign operations subcommittee.

A senior administration official said there was still a ``significant difference`` between the compromise and what the Bush administration is seeking.

The administration has insisted on a total freeze on new settlements in return for the $10 billion in loan guarantees, or a partial freeze in exchange for a lesser amount of guarantees.

The senior official said the negotiations were still underway, and various proposals were still being considered by the administration.

Israeli officials, who are closely following the legislation, said they were waiting to see the final details of the Kasten-Leahy proposal, and the administration`s response, before their government reacts.

The American-Israel Public Affairs Committee, a pro-Israeli lobby, has been encouraging Israel, the administration and Congress to reach a compromise.

Congressional and administration officials said the Leahy-Kasten compromise includes:

--The 1992 foreign aid bill would authorize $2 billion in loan guarantees for Israel each year for the next five years.

--Disbursement of the first $1 billion in guarantees would take place within 30 days of passage of the legislation.

--Disbursement of the second $1 billion in guarantees for 1992, as well as the $2 billion a year for the subsequent four years, would be at the president`s discretion.

Bush could hold up the guarantees if he decided that the level of Israeli settlement building activity in the occupied territories was deemed inappropriate by the administration.

--Israel would be allowed a certain amount of ``natural growth`` on the West Bank and Gaza Strip, even under a total freeze. Roads could be built and wells dug -- provided that they are for the use of the Arab and Jewish population.